Common Principles of Commercial Law Assignment PDF

Running head: COMMON PRINCIPLES OF COMMERCIAL LAW
Common Principles of Commercial Law
Name of the Student
Name of the University
Author Note

1COMMON PRINCIPLES OF COMMERCIAL LAW
Answer 1:
Issue:
The issue in this case is associated with the fact that whether the oral assurance on the
part of Kalpana can be considered as a valid contract.
Law:
It is noteworthy to mention here that, for the purpose of making a valid contract, there must
be an agreement. Such agreement can be oral or written. The concept of oral assurance was first
observed in the landmark case of Goss V Lord Nugent (1833) 5 B & Ad 58 (at 64-65)110 ER
713 (at 716). In this context, mention can be made of the Parole Evidence Rule with the help of
which the subject-matter of oral assurance can be emphasized. Similarly, in Sydney V Taylor
(1891) 12 LR (NSW) 252 (at 262) [2], it was held that a written contract acts as a proof of
standard agreement between the parties involved however; a oral contract do not provide such
assurance. It is worthwhile to refer here that, the abovementioned landmark cases efficiently
emphasized the terms of a valid contract in regard to oral or verbal contract. In such cases, the
Courts are at the authority to assume that the terms and conditions depicted in the contract has
been planned by the parties however; did not intend to perform the terms and conditions as a
result of certain circumstances. It is worth mentioning, that there may be an existence of
unreliable evidence in a contract. From the beginning, the Parole Evidence Rule has laid
emphasis on the presence of unreliable evidence in a contract. In some cases, it has been
observed that sometimes the terms and conditions of an oral agreement or a written agreement
have not brought to the notice of the parties. It is worth mentioning that, for the purpose of
providing appropriate solution to the parties in dispute, the principles of Parole Evidence Rule
has been followed by the Courts and applied according. Therefore, in this regard, it is noteworthy
to mention here that by applying the Parole Evidence Rule there lays an authority on the part of
the Courts to proceed towards a final decision regarding matters involving certainty of rights and
duties of the parties to the contract in order to prevent them from deceptive claims. The Parole
Evidence Rule emphasizes on the fact that in order to discharge the terms and conditions of a
written contract, the consequences of a oral contract cannot be relied upon neither it can be

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claimed or modified. In this regard, the exceptions of the Parole Evidence Rule can be
emphasized. The exceptions are-
 Contracts which are party written and partly oral.
 Rectification.
 Suspension of operation.
 Uncertain.
 Invalidity.
The condition of oral assurance is only allowed by the Courts on the ground that the
terms and conditions of the written contract are not intended to form part of the main agreement.
It is worthwhile to mention here that, there may be an existence or oral agreement or assurance in
a written contract due to the reason that the terms and conditions written in the contract are not
intended to form a part of the whole contract. Therefore, in some cases, it may occur that, unfair
disadvantage can be taken by one of the parties to the contract which was observed in the case
Van den Esschert v Chappell [1960] WAR 114. In this case, there was an existence of oral
assurance in the contract. It was observed that prior to the signing of the sale agreement, the
purchaser was guaranteed by the seller by way of oral assurance regarding the fact that there is
no presence of white ants in the house. After buying the house, the purchaser noticed that white
ants were present in the house from the beginning and as a result of it the timbers were all
destroyed by them. Therefore, the purchaser sued the seller for breach of oral contract and was
compensated for the damage caused. In this case, the Court was of the opinion that, the oral
assurance on the part of the seller regarding the fact that there were no white ants in the house
can be considered as an essential term of the contract however; it was not written in the contract
in order to escape liability. In Nemeth v Bayswater Road Pty Ltd [1988] 2 Qd R 406, it was
observed that there was a presence of additional charges in the contract which was depicted in
the written agreement. However, the defendant by way of oral assurance assured the plaintiff that
no additional charges are hidden in the contract. Later on, after identifying the additional hidden
charges the plaintiff sued the defendant for breach of oral contract.
Application:

3COMMON PRINCIPLES OF COMMERCIAL LAW
In the present scenario, Kalpana orally assured to Rafia that the form of the dance will be
in the form of traditional, classical dance. Therefore, the cases Goss V Lord Nugent (1833) 5 B
& Ad 58 (at 64-65)110 ER 713 (at 716) and Sydney V Taylor (1891) 12 LR (NSW) 252 (at 262)
[2] can be referred because the Parole Evidence rule can be applied here. It is evident that
Kalpana did not intend to perform the terms and conditions of the contract. The form of dance
and the oral assurance given by Kalpana was not mentioned in the written contract signed
between her and Rafia. However, the oral assurance given by Kalpana formed an essential part
of the whole contract. In this regard, it is worthwhile to apply the cases of Van den Esschert v
Chappell [1960] WAR 114 and Nemeth v Bayswater Road Pty Ltd [1988] 2 Qd R 406.
Conclusion:
In the conclusion, it can be stated that the oral assurance on the part of Kalpana can be
considered as a valid contract.
Answer 2:
Issue:
The issue is concerned with the fact that whether the Courts are at the authority to treat
oral assurance as a condition or warranty.
Law:
Conditions are important part of a contract and failure to perform the conditions may
result into breach. On the other hand, warranty is the statement provided by one of the parties to
the contract for the purpose of providing oral assurance to the parties about the existence of
certain factual details in the contract. In Poussard v Spiers (1875) L.R. 1 QBD 410, there was a
breach of both condition and warranty. Similarly, in Bettini v Gye (1875) L.R. 1 QBD 183, it
was observed that warranty forms an essential part of a written contract which assures the parties
about the nature of the contract. In De Lassalle v Guildford (1901) 2 KB 215, it was held by the
Court that a verbal agreement must act in accordance with a written agreement. In this regard, it
is worth mentioning the concept of collateral contract. A collateral contract acts consistently with
the main contract. It is noteworthy to mention here in collateral contracts, the parties may intend
to involve an oral assurance along with the written agreement. A warranty is a oral assurance on

4COMMON PRINCIPLES OF COMMERCIAL LAW
the part of the seller to the buyer before a contract is signed between them for the purpose of
assuring the buyer about the quality and performance of the product in concern. It is worth
noting that when a contract is formed, each and every statements made by the parties in relation
to it must be taken into account which was held in Heilbut, Symons and Co. v Buckleton [1913]
AC 30. In Royal Bank of Scotland plc v Carlyle [2013] CSIH 75, it was held by the Court that,
oral assurances and collateral warranties form an important part of written contract. In this case,
it was observed that the employee provided collateral warranty in order to provide oral assurance
to the plaintiff. The Court, in this case held that collateral warranties are always associated with
oral assurance or promise which needs to be taken into consideration while identifying the
validity of the contract. However, in case of breach of oral assurance the defendant shall be held
liable. In this case, the Court laid much emphasis on the fact that whether the telephonic
communication between the plaintiff and the defendant can be considered as a warranty.
However, during that point of time confusion was created on the part of the Court regarding the
fact that whether collateral warranty is an important term of contract which acts alongside the
main contract or whether it can be considered as a verbal assurance which forms a significant
part of the main contract. In this regard, the Court finally held that, warranty can be treated as a
oral assurance which forms a significant part of the contract. However, the nature of the warranty
must be such as it can be declared to be contractual which was held in British Workman’s and
General Assurance Co v Wilkinson (1900) 8 SLT.
Application:
In the present scenario, it is evident that Kalpana orally assured Rafia regarding the
nature of the dance form. Therefore, such oral assurance can be considered as a warranty. In this
regard, the cases Bettini v Gye (1875) L.R. 1 QBD 183 and Poussard v Spiers (1875) L.R. 1
QBD 410 can be referred. It is worthwhile to apply the case of De Lassalle v Guildford (1901) 2
KB 215 because the oral assurance on the part of Kalpana acted consistently alongside the
written agreement with Rafia. It was orally assured by Kalpana that the dance form would be
traditional and classical which was not mentioned in the written agreement however; the oral
assurance provided by Kalpana formed a collateral warranty which in consistent with the written
contract. Therefore, the case of Royal Bank of Scotland plc v Carlyle [2013] CSIH 75 can also
be applied because according to this case collateral warranty exists alongside the main contract.

5COMMON PRINCIPLES OF COMMERCIAL LAW
The case of Heilbut, Symons and Co. v Buckleton [1913] AC 30 can be efficiently applied in
the scenario because each and every statement made by Kalpana during the course of contract
has to be taken into account which includes her oral assurance as well. It is worth mentioning
that the collateral warranty by way of oral assurance that existed between Kalpana and Rafia was
contractual in nature therefore, the case of British Workman’s and General Assurance Co v
Wilkinson (1900) 8 SLT can be applied to it.
Conclusion:
It can be concluded that oral assurance is considered as a warranty by the Courts.
Answer 3:
Issue:
The issue is concerned with the remedies which are available to the USC.
Law:
According to the law of contract, for the purpose of making a valid contract there must be
an agreement between the parties to the contract. In case, if one of the parties do not perform
their contractual obligations or fails to perform according to the terms and conditions depicted in
the contract, it causes breach of contract. Breach of contract under the principles of common law
can be categorized into-
1) Damages.
2) Liquidated damages.
3) Specific performance.
4) Injunctions.
Damages for breach of contract can be incurred by the injured party however; damages are
not meant to punish the defendant for conducting breach, it only helps the plaintiff to recover
compensation. In some cases, there may be presence of a clause in the contract which contains
information about a particular amount as agreed by the parties that shall be recovered on breach
of contract. Such remedies are termed as liquidated damages. Specific performance is ordered by
the Court in order to direct the parties in breach to perform the obligations of the contract in a

6COMMON PRINCIPLES OF COMMERCIAL LAW
specific manner. It is worth noting that specific performance is an order on the part of the Court
when it becomes reasonable to it that damages cannot provide sufficient compensation to the
injured parties. In this regard, mention can be made of injunctions which is an order directed by
the Court to restrain the parties to the contract from performing certain contractual obligations. It
was held in Airloom Holdings Pty Ltd v Thales Australia Ltd [2011] NSWSC 1513 that the
contractors can sue for damages in order to claim damages for non-performance of contract. It
was held in Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64 that it
is necessary to place the parties to breach at a position, if the terms and conditions of the contract
were completely performed.
If monetary damages do not provide adequate compensation in order to fulfill the
requirements of the parties to breach then, the Courts are at the authority to order specific
performance. In this regard, it is noteworthy to mention here that specific performance is
considered as a discretionary remedy which may or may not be imposed by the Courts if
damages are available to provide sufficient remedy. Therefore, damages can be applied if losses
are incurred during the course of contract as a result of breach on the part of one of the parties to
the contract. In this regard, it is worth examining the fact that on breach of contract as a result of
conduct on the part of the parties, liquidated damages may be imposed by the Courts
accordingly. In case of imposition of injunction by the Court, it shall be based upon the
determination of the various kinds that are- mandatory, prohibitory and interlocutory. Mandatory
injunctions are generally imposed by the Courts in order to direct the parties to perform a
specific task regarding the matter in question. Interlocutory injunctions are imposed by the
Courts in order to maintain the status quo of the present matter. Prohibitory injunction is applied
by the Courts in cases, when it is required to prohibit the parties to the contract to perform
certain obligations.
Application:
In the present case study, it is evident that thousands of dollars were invested while
advertising the multicultural dance program on the part of USC. It is worthwhile to refer the case
of Airloom Holdings Pty Ltd v Thales Australia Ltd [2011] NSWSC 1513 in this scenario
because it was held that there is a right on the part of the parties to claim damages for non-
performance. Therefore, in the present case study, USC can sue Kalpana for non-performance of

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contract and claim compensation for the same. In this regard, it is important to apply the case of
Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64, as Kalpana can be
placed in the same situation that is being faced by the USC at present, if the terms of the contract
would have been performed by her. In this regard, it can be stated that Courts are at the authority
to impose specific performance if monetary damages do not prove to be enough in providing
adequate relief to the injured party. In the present scenario, if the damages are not adequate to
provide appropriate remedy to USC, then the courts shall impose specific performance.
Conclusion:
It can be concluded that, both the remedies of liquidated damages and specific
performance are open to USC.

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References:
Cases:
Airloom Holdings Pty Ltd v Thales Australia Ltd [2011] NSWSC 1513.
Bettini v Gye (1875) L.R. 1 QBD 183.
British Workman’s and General Assurance Co v Wilkinson (1900) 8 SLT.
Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64.
De Lassalle v Guildford (1901) 2 KB 215.
Goss V Lord Nugent (1833) 5 B & Ad 58 (at 64-65)110 ER 713 (at 716).
Heilbut, Symons and Co. v Buckleton [1913] AC 30.
Nemeth v Bayswater Road Pty Ltd [1988] 2 Qd R 406.
Poussard v Spiers (1875) L.R. 1 QBD 410.
Royal Bank of Scotland plc v Carlyle [2013] CSIH 75.
Sydney V Taylor (1891) 12 LR (NSW) 252 (at 262) [2].
Van den Esschert v Chappell [1960] WAR 114.